Construction Industry Collapse

Throughout this year we have seen the collapse of many construction companies both large and small. This continues to be the norm going forward. This news leaves people interested in building rather unsettled.  

While it seems to be occurring more across the residential construction industry the commercial side is seeing some of this too. We have seen the closure of some very large well-known developers.

It is understood that these companies have struggled with cash flow issues due to material increases and project delays. In addition to this, the labour market has been difficult and companies have had to increase wages to appeal to skilled workers in order to complete project demand.

Companies that have been locked into fixed-price contracts with clients have had to absorb these unexpected cost increases for as long as they can. But unfortunately, this can not last forever which has resulted in what we have been seeing with all these liquidations across the industry.

Hopefully, the increase in interest rates will slow construction demand and will decrease the number of construction companies unable to meet payment demands to creditors. We are already seeing a decrease in the number of building approvals across Australia which is a positive sign for the industry.

This is an alarming situation combined with still a relatively high interest in consumers looking to build means new home builders need to be very cautious of who they choose as their builder. See here for some of the things to look out for when choosing a builder - What to look for when hiring a builder.